Malawi Police Service Fiscal and Fraud Section has made a fresh arrest in a matter which some commercial banks in the country were defrauded out of at least K20.9 billion after a Pakistani businessperson, who was one of the directors at a local cotton company, obtained loan facilities totalling K20.9 billion and fled the country.
Cotton Ginners Africa Limited board chairperson Mahommed Farook Ibrahim was picked by Police for interrogation on suspicion of playing a role in the fraud.
Abdul Yasin Reiman charged with theft, fraud and money laundering
Fiscal Police head Isaac Norman said Ibrahim, of British origin, was arrested on Friday and is being jointly charged with a Pakistan national Abdul Rehman arrested last week Tuesday.
“We have charged the two with theft, fraud and money laundering offences,” said Norman.
He kept further details close to his chest to avoid jeopardising the investigations.
Rehman, one of directors at Cotton Ginners Africa Limited before he left Malawi with his family in April, was brought into the country last Tuesday and he immediately landed in the hands of law enforcers who interrogated him for hours.
The businessperson was traced in Pakistan by Malawian private investigators with the help of Pakistani authorities and brought into the country to the relief of the banks that granted the loans and proprietors and directors of Cotton Ginners.
While Rehman was away, Cotton Ginners Africa Limited applied for bankruptcy at the Commercial Court in Blantyre, an application the banks challenged.
Rehman is believed to have remitted over $5 million (over K3.6 billion at the current exchange rate) in foreign accounts, according to an audit report by Audit Consult Advisory Services Limited dated July 23 2017, which is contained in court documents.
The major victim of the suspected fraud is Standard Bank Limited, which is owed K8 585 177 082, followed by Reserve Bank of Malawi’s Export Development Fund (K4 092 547 425), Ecobank Malawi Limited (K3 499 481 627), CDH Investment Bank (K4 476 302 691) and National Bank of Malawi (K250 000 000).
The total amount at stake is K20 903 508 825, but it has also been established that the total liabilities for Cotton Ginners Africa Limited is K23 656 808 338, with the company’s total assets pegged at K10 011 666 092.
The company requires K13.2 billion to return to solvency, court documents we saw indicated.
The local banks, in a move to recover their money and save their reputations, teamed up to object the bankruptcy application that remaining directors of Cotton Ginners filed at the High Court’s Commercial Court Division in Blantyre.
Follow and Subscribe Nyasa TV :